begins with formulating an offering to meet target customers needs or wants.

The customer will judge the offering by three basic elements: product features and quality services mix and quality price

core benefit - the service or benefit the customer is really buying basic product what a marketer must turn the core benefit into expected product - a set of attributes and conditions buyers normally expect when they purchase this product

augmented product - exceeds customer expectations potential product - encompasses all the possible augmentations and transformations the product or offering might undergo in the future consumption system - the way the user performs the tasks of getting and using products and related services

Marketers classify products on the following basis:

Durability Tangibility Use

Consumer Industrial

Nondurable goods Durable goods

Services

Nondurable goods - are tangible goods normally consumed in one or a few uses Durable goods - are tangible goods that normally survive many uses Services - are intangible, inseparable, variable, and perishable products that normally require more quality control, supplier credibility, and adaptability

We classify the vast array of consumer goods on the basis of shopping habits.

Convenience Specialty

Shopping Unsought

usually purchased frequently, immediately and with minimal effort.

Staples - are convenience goods consumers

purchase on a regular basis. Impulse goods - are purchased without any planning or search effort. Emergency goods - are purchased when a need is urgent

those the consumer characteristically compares on such bases as suitability, quality, price, and style.
Homogeneous shopping goods - are similar in quality but different enough in price to justify shopping comparisons. Heterogeneous shopping goods - differ in product features and services that may be more important than price.

have unique characteristics or brand identification for which enough buyers are willing to make a special purchasing effort.

are those the consumer does not know about or normally think of buying

We classify industrial goods in terms of their relative cost and how they enter the production process:
materials and parts
capital items Supplies and Business Services

are goods that enter the manufacturers product completely.

Raw materials farm products - supplied by many producers natural products - are limited in supply. They usually have great bulk and low unit value and must be moved from producer to user. Manufactured materials and parts Component materials - are usually fabricated further Component parts - enter the finished product with no further change in form

long-lasting goods that facilitate developing or managing the finished product.

Installations - consist of buildings and heavy

equipment Equipment - includes portable factory equipment and tools and office equipment

are short-term goods and services that facilitate developing or managing the finished product.
Supplies maintenance and repair items operating supplies Business Services maintenance and repair services - are usually supplied under contract by small producers or from the manufacturers of the original equipment. business advisory services - are usually purchased on the basis of the suppliers reputation and staff.

FORM - the size, shape, or physical structure of a product. FEATURES supplement a products basic function. CUSTOMIZATION - differentiate products by customizing
to meet each customers requirements

Mass customization - is the ability of a company

PERFORMANCE QUALITY - is the level at which the products primary characteristics operate. CONFORMANCE QUALITY the degree to which

all produced units are identical and meet promised specifications

DURABILITY - a measure of the products expected operating life under natural or stressful conditions RELIABILITY - is a measure of the probability that a product will not malfunction or fail within a specified time period. REPAIRABILITY - measures the ease of fixing a product when it malfunctions or fails. STYLE - describes the products look and feel to the buyer. It creates distinctiveness that is hard to copy.

When the physical product cannot easily be differentiated, the key to competitive success may lie in adding valued services and improving their quality. ORDERING EASE - refers to how easy it is for the customer to place an order with the company. DELIVERY - refers to how well the product or service is brought to the customer. It includes speed, accuracy, and care throughout the process. INSTALLATION - refers to the work done to make a product operational in its planned location.

CUSTOMER TRAINING - helps the customers employees use the vendors equipment properly and efficiently. CUSTOMER CONSULTING - includes data, information systems, and advice services the seller offers to buyers. MAINTENANCE AND REPAIR - programs help customers keep purchased products in good working order.

Controllable returns - result from problems or errors by the seller or customer Uncontrollable returns - result from the need for customers to actually see, try, or experience products in person to determine suitability

is the totality of features that affect how a product looks, feels, and functions to a consumer. Design offers functional and aesthetic benefits and appeals to both our rational and emotional sides.

1. 2. 3. 4.

bold simplicity real authenticity the power of red a familiar yet surprising nature

Design

thinking is a very data-driven approach with three phases:

observation Ideation implementation.

Need family - The core need that underlies the existence of a product family. Product family - All the product classes that can satisfy a core need with reasonable effectiveness. Product class - A group of products within the product family recognized as having a certain functional coherence, also known as a product category. Product line - A group of products within a product class that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges. Product type - A group of items within a product line that share one of several possible forms of the product. Item (also called stock-keeping unit or product variant) A distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute

product system - is a group of diverse but related items that function in a compatible manner. product mix

also called a product assortment is the set of all products and items a

particular seller offers for sale.

A companys product mix has a certain width, length, depth, and consistency.

Length - refers to the total number of items in the mix. Depth - refers to how many variants are offered of each product in the line. Consistency - describes how closely related the various product lines are in end use, production requirements, distribution channels, or some other way.

Width - refers to how many different product lines the company carries.

Provides information for two key decision areasproduct line length and product mix pricing.
SALES AND PROFITS must be carefully

monitored and protected to determine which items to build, maintain, harvest, or divest. MARKET PROFILE - reviews how the line is positioned against competitors lines.

shows which competitors items are competing against a companys item it identifies market segments.

Product Map for a Paper-Product Line

Company objectives influence product line length: to create a product line to create a product line to induce up-selling to create a product line that facilitates cross-selling to create a product line that protects against economic ups and downs

Companies seeking high market share and market growth will generally carry longer product lines. Companies that emphasize high profitability will carry shorter lines consisting of carefully chosen items.

A company lengthens its product line in two ways: 1. LINE STRETCHING - occurs when a

company lengthens its product line beyond its current range, whether downmarket, up-market, or both ways.

A company positioned in the middle market may want to introduce a lower priced line for any of three reasons: 1. The company may notice strong growth opportunities as mass retailers. 2. The company may wish to tie up lowerend competitors who might otherwise try to move up-market. 3. The company may find that the middle market is stagnating or declining.

Companies may wish to enter the high end of the market to achieve more growth, realize higher margins, or simply position themselves as full-line manufacturers.

Companies serving the middle market might stretch their line in both directions.

LINE FILLING - A firm can also lengthen its product line by adding more items within the present range.
Motives for line filling: reaching for incremental profits satisfying dealers who complain about lost sales because of items missing from the line. utilizing excess capacity trying to become the leading full-line company plugging holes to keep out competitors

Product lines need to be modernized. The question is whether to overhaul the line piecemeal or all at once.

A piecemeal approach allows the company

to see how customers and dealers take to the new style.

the firm searches for a set of prices that maximizes profits on the total mix.

six situations calling for product mix pricing:

product line pricing optional-feature pricing captive-product pricing two-part pricing by-product pricing product-bundling pricing

PRODUCT LINE PRICING - Companies normally develop product lines rather than single products and introduce price steps. OPTIONAL-FEATURE PRICING - Many companies offer optional products, features, and services with their main product. CAPTIVE-PRODUCT PRICING - Some products require the use of ancillary or captive products. TWO-PART PRICING - Service firms engage in two-part pricing, consisting of a fixed fee plus a variable usage fee. BY-PRODUCT PRICING - The production of certain good soften results in by-products that should be priced on their value. PRODUCT-BUNDLING PRICING Sellers often bundle products and features.

Pure bundling - occurs when a firm offers its products only as a bundle.

Mixed bundling - the seller offers goods both individually and in

bundles, normally charging less for the bundle than if the items were purchased separately.

Marketers often combine their products with products from other companies in various ways.
Co-Branding - also called dual branding or

brand bundlingtwo or more well known

brands are combined into a joint product or marketed together in some fashion. same-company co-branding joint-venture co-branding multiple-sponsor co-branding retail co-branding

a product can be convincingly positioned by virtue of the multiple brands. can generate greater sales from the existing market and open opportunities for new consumers and channels. can also reduce the cost of product introduction, because it combines two wellknown images and speeds adoption. means to learn about consumers and how other companies approach them.

risks and lack of control in becoming aligned with another brand in consumers minds. Consumer expectations of co-brands are likely to be high, so unsatisfactory performance could have negative repercussions for both brands. If the other brand enters a number of cobranding arrangements, overexposure may dilute the transfer of any association. lack of focus on existing brands Consumers may feel less sure of what they know about the brand.

the two brands must separately have brand equityadequate brand awareness and a sufficiently positive brand image. logical fit between the two brands, to maximize the advantages of each while minimizing disadvantages. they are complementary and offer unique quality, rather than overly similar and redundant.

is a special case of co-branding It creates brand equity for materials, components, or parts that are necessarily contained within other branded products.

Consumers must believe the ingredient matters to the performance and success of the end product. Consumers must be convinced that not all ingredient brands are the same and that the ingredient is superior. A distinctive symbol or logo must clearly signal that the host product contains the ingredient. A coordinated pull and push program must help consumers understand the advantages of the branded ingredient.

includes all the activities of designing and producing the container for a product. The package is the buyers first encounter with the product. A good package draws the consumer in and encourages product choice.

Self-service effective package must perform many sales tasks: attract attention, describe the products features, create consumer confidence, and make a favorable overall impression. Consumer affluence - means consumers are willing to pay a little more for the convenience, appearance, dependability, and prestige of better packages. Company and brand image - Packages contribute to instant recognition of the company or brand. In the store, they can create a billboard effect, such as Garnier Fructis with its bright green packaging in the hair care aisle. Innovation opportunity - Unique or innovative packaging such as resealable spouts can bring big benefits to consumers and profits to producers.

1. Identify the brand. 2. Convey descriptive and persuasive information. 3. Facilitate product transportation and protection. 4. Assist at-home storage. 5. Aid product consumption.

can be a simple attached tag or an elaborately designed graphic that is part of the package can be a simple attached tag or an elaborately designed graphic that is part of the package

Functions of Labeling: Identifies Grade Describe Promote

Warranties - are formal statements of expected product performance by the manufacturer. Products under warranty can be returned to the manufacturer or designated repair center for repair, replacement, or refund.